ASC 310-30
Loans and Debt Securities Acquired with Deteriorated Credit Quality
310 Receivables
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In brief
IntermediateFinancial instrumentsImpairmentTransition and effective datesSubsequent measurementASC 310-30 formerly governed loans and debt securities acquired with evidence of deteriorated credit quality (so-called purchased credit-impaired assets), where it was probable at acquisition that the investor would not collect all contractually required payments receivable; it required accreting the excess of expected cash flows over the initial investment into interest income as accretable yield and prohibited carrying over or creating a valuation allowance at acquisition. Every substantive paragraph of this subtopic has been superseded by Accounting Standards Update No. 2016-13 (CECL). Purchased financial assets with credit deterioration are now accounted for under Subtopics 326-20 and 326-30.
Key points (7)
- All paragraphs in Sections 05, 15, 25, 30, 35, 40, 45, 50, 55, and 60 of 310-30 were superseded by Accounting Standards Update No. 2016-13, so the subtopic contains no operative guidance for entities that have adopted that Update.
- Paragraphs 310-30-25-2 and 310-30-35-4 are marked 'Paragraph not used,' confirming the shell structure that remains.
- The superseded scope (310-30-15) covered loans and debt securities acquired by completion of a transfer, including purchases and business combinations, with evidence of credit deterioration since origination where it was probable the acquirer would not collect all contractually required payments.
- The superseded measurement model (310-30-30 and 310-30-35) recognized the excess of the investor's estimate of undiscounted expected cash flows over the initial investment as accretable yield over the asset's life, with the nonaccretable difference not recognized as an allowance at acquisition.
- Under the superseded model, decreases in expected cash flows after acquisition were recognized as impairment, while increases were recognized prospectively as a yield adjustment (former 310-30-35 guidance).
- Entities may still need this superseded text for pre-adoption comparative periods; current accounting for purchased financial assets with credit deterioration is in Subtopics 326-20 (amortized cost) and 326-30 (available-for-sale debt securities).
- Effective-date and transition requirements for moving off 310-30 are found in the transition guidance of ASU 2016-13 and Subtopic 326-10.
For students. Treat 310-30 as legacy history: the PCI accretable-yield model is fully superseded by the PCD "gross-up" approach in ASC 326-20/326-30. The common error is citing 310-30 as live GAAP or assuming no allowance is recorded at acquisition, when under CECL an allowance is added to the purchase price on day one.
Machine-generated study aid for ASC 310-30. Check the source paragraphs below.
310-30-00Status
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310-30-05Overview and Background
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310-30-15Scope and Scope Exceptions
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310-30-25Recognition
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310-30-30Initial Measurement
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310-30-35Subsequent Measurement
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310-30-40Derecognition
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310-30-45Other Presentation Matters
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310-30-50Disclosure
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310-30-55Implementation Guidance and Illustrations
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310-30-60Relationships
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